SEBI amends custodian norms, requires dedicated net worth of INR 750 million
This story was originally published at 06:00 IST on 19 December 2024
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--SEBI approves proposals on custodian regulations to simplify compliance
NEW DELHI – The Securities and Exchange Board of India Wednesday got board approval to require custodians to maintain a dedicated net worth of INR 750 million, with existing custodians being given three years to achieve the same. Other proposals by SEBI to strengthen the regulatory framework for custodians and also to simplify compliances were also approved by the board.
There are around 17 custodians registered with SEBI whose services are availed of by institutional clients such as foreign portfolio investors, mutual funds, portfolio managers, alternative investment funds, and non-institutional clients such as family offices and high net worth individual investors. Under changes by SEBI in the regulations, custodians will bear a similar framework of enhanced obligations and responsibilities as qualified stock brokers.
The custodians will also have to adopt a framework on business continuity plan and disaster recovery and orderly winding down. Further, they will not be allowed to undertake activities incidental to regulated activities such as fund account unless they had effective conflict of interest controls in place.
Under the ease-of-compliance for custodians, SEBI has decided to remove the requirement of vaults if a custodian is not holding any physical securities. Further, for outsourcing of non-core custodian activities, SEBI is open to getting a list of core and non-core activities from them to consider. End
Reported by Rajesh Gajra
Edited by Akul Nishant Akhoury
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